VW reaches deal with suppliers to resume production

The car giant obtained court injunctions ordering the two suppliers to resume delivery in early August.

Frankfurt:

German car giant Volkswagen said on August 23 it had reached a deal with suppliers to begin deliveries again after a stoppage that forced the group to halt production at several plants.

"The affected sites are preparing step-by-step to resume production," VW said in a statement.

VW and suppliers Cartrim and ES Guss -- which make seat covers and gearbox parts -- had returned to talks on Monday after negotiations into the small hours of Saturday yielded no results.

The VW statement added that both parties had agreed to keep details of the agreement secret. Without a deal, VW had warned on Monday, around 28,000 workers at the six plants affected would have seen shifts cut. Some had already lost hours since deliveries of the vital parts had been interrupted.

The car giant obtained court injunctions ordering the two suppliers to resume delivery in early August. But they refused, saying that VW had cancelled future contracts without providing adequate compensation.

A spokesman for Prevent, the two suppliers' parent company, told business daily Handelsblatt on Friday that VW was imposing "unacceptable conditions" on its suppliers. Politicians had added pressure on the two sides to reach a deal on Monday.

"This should not be an example for others to learn from," warned Stephan Weil, premier of Lower Saxony state, as he welcomed the deal on Tuesday.

Lower Saxony is home to tens of thousands of VW workers at the group's Wolfsburg headquarters and is also a major VW shareholder.

Employees of the company "became victims of a conflict that was needlessly fought out on their backs," Weil said.

Volkswagen, which also owns brands from luxury Audi to lower-end Skoda, is still in the throes of its biggest-ever crisis after it admitted in September 2015 to a massive emissions cheating scandal affecting 11 million diesel engines.

It has agreed to pay out $14.7 billion to settle damage claims in the US, although some analysts have estimated the final cost of the affair at $20-30 billion dollars as further claims roll in.

Shares in VW immediately jumped on news of the deal, gaining around 2.2 per cent to 122.7 in morning trading in Frankfurt -- outstripping the DAX index's gain of 0.65 per cent